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The Government of the Republic of Serbia

In the service of citizens

Budget must contain measures to alleviate effects of global economic crisis

Belgrade, 3 December 2008

Prime Minister Mirko Cvetkovic stated that it is important that the 2009 budget contains measures to alleviate the effects of the global economic crisis, as it is one of the pillars of economic policy and must be restrictive in certain areas.

Cvetkovic told Vreme weekly that the adoption of the 2009 budget bill is late as it takes time to outline adequate economic measures for alleviating the effects of global economic crisis.

He said that government estimates show that the budget projection and planned economic policy should be sustainable next year, noting that the budget will be partly restrictive and partly stimulative as it will continue with infrastructure investments.

The size of the global financial crisis is not yet clearly known, no one knows how long it will last, and yet the government’s response depends on knowing, he said.

There are disagreements on budget division he noted, also commenting on the euro exchange rates by saying that the government must cooperate with the National Bank of Serbia (NBS) and announced that an expert group has been formed already.

He said that it was agreed with the NBS to fund the private sector, primarily exporters.

Our inflation projection for next year is below 10%, which I think is realistic, said Cvetkovic.

The time ahead of us will not be easy, but people should not panic, he said, adding that the government hopes are mainly based on infrastructure investments and other incentives.

He also commented that the rumours of mass dismissals from work are not true.

The state has to determine whether the current dismissals are legal. The development of Serbia has slowed down but we must not spread panic, stressed the Prime Minister.

He pointed out that Serbia needs a strategy in order to make savings and therefore development programmes of major importance will be implemented.

According to Cvetkovic, Corridor 10 is of top importance for Serbia as the activity of the Serbian market depends on it.

The Prime Minister said that some private investors are also interested in the energy sector, adding that a tender for thermoelectric power plants will be announced by the end of this year.

Cvetkovic also said that Serbia will receive great economic benefits from the oil and gas agreement with Russia, therefore it is of top importance that the agreement is ratified in its entirety. Serbia will insist that the agreement includes the sale of 51% of the Serbian oil industry NIS, construction of the gas pipeline and reconstruction of the gas storage facility in Banatski Dvor.

According to Cvetkovic, Russia is not able to sign all three parts of the agreement since it has not yet clearly defined the parameters or prepared a feasibility study.

Cvetkovic added that a Russian delegation will visit Belgrade later this week.

He also said that the value of NIS’s free shares will depend on the market and therefore the shareholding company NIS will be converted from closed to an open one.